Switzerland is one of the main countries chosen by companies to conduct security token offerings (STO). This is partly due to the country support for cryptocurrency development.
In September 2020, the Swiss parliament passed the DLT Act. It establishes Switzerland as a leader in the field and lays the foundation for transforming the financial infrastructure from centralized to decentralized. In particular, the law authorizes a new form of uncertified securities, issued and managed on a DLT register.
Switzerland and the token regulation
Switzerland has new a legislation for security tokens.
On 25 September 2020, the Swiss Parliament adopted the “Federal Act on the Adaptation of Federal Law to Developments in Distributed Electronic Register Technology”. It provides the legal basis for the secure storage, trading and settlement of security tokens. On 1 February 2021, certain parts of this law came into force, enabling the first security tokens to be issued in Switzerland. In particular, the authorization for uncertificated securities came into force.
First swiss «tokenized» companies
Thanks to the new law, the first swiss companies start to be tokenised. Companies offer tokens that represent their own shares managed on the Ethereum blockchain.
The issued Token represents the company’s shares and it is the first equity Token issued on Ethereum. This is new, since the previous regulation only allowed the trading of payment tokens (Bitcoin, Litecoin, etc.) and utility tokens (Ethereum, Stellar, etc.). Thanks to the new Swiss DLT law, companies in Switzerland can finally issue their shares in the form of non-certified securities using a DLT register. The International Token Standardization Association (ITSA) recently announced that these tokens entered into its Tokenbase.
L’ International Token Standardization Association (ITSA)
ITSA is a non-profit organization. It is an interest group that aims at the development and implementation of global market standards. Its purpose is the identification, classification and analysis of cryptographic tokens based on blockchain and DLT. The objective of the Association is therefore to promote the development and use of cryptographic tokens based on blockchain and distributed ledger technology. ITSA currently has over 100 members, including companies and public organizations.
To increase transparency and security on global token markets, ITSA assigns each type of token a unique identifier (ITIN). It identifies the token on all platforms even in the event of a fork. Using ITIN, the token is classified according to the International Token Classification Framework (ITC). ITSA, for its part, is adding the classified token to the world’s largest token data registry, the Tokenbase.
The purpose of assigning a unique identifier to each type of token is to ensure unique identification. In addition, operational risk is reduced and greater transparency is offered to markets and customers.
ITIN, ITC and Tokenbase
ITSA in recent years has been involved in three initiatives: ITIN, ITC and Tokenbase. They are aimed at creating standards and providing useful elements to create a consistent global context for the world of tokens:
– the International Token Identification Number (ITIN): is a 9-digit alphanumeric technical identifier. It is useful for greater operational transparency and security in the management of fungible and non-fungible tokens based on DLT. This allows other media and data to be connected and matched to the token, such as contracts or price data.
– the International Token Classification System (ITC): is a framework for the classification of tokens according to a multidimensional approach (technological, economic, legal and regulatory dimensions). So far, over 200 tokens have been classified according to 6 dimensions, covering 99% of the token market by market cap.
– Tokenbase is the largest DLT token database in the world, for token analysis. It combines token identification and classification data with market and blockchain data from external suppliers. Currently, Tokenbase contains data on over 800 tokens with data from various partners already integrated and access through API for application developers.
Regulatory developments and also developments in international standards are gradually enabling the possibility of offering new types of tokens on a DLT infrastructure, in particular equity tokens. Switzerland is leading the way in this area and the new regulations that came into force in February 2021 are already showing their effects. It should be noted that today, fewer than 300 of Switzerland’s 500,000 companies are listed on the stock exchange. This opens up new financing opportunities for a very large number of companies.